...portfolios built using aggregate analyst recommendations may produce gross outperformance, but transaction costs absorb excess returns. Moreover, privileged investors get the jump on analyst-driven trades.
...the Fed Model has worked pretty well starting about 1960, with interest rates since playing a key role in stock valuation.
In their June 2003 paper entitled “A General Theory of Stock Market Valuation and Return”, Christophe Faugere and Julian Van Erlach contend that past stock returns are overstated and develop a market valuation formula that...
In his May 2002 paper entitled “Market Timing Strategies that Worked”, Pu Shen evaluates the effectiveness of the spreads between the S&P 500 index earnings yield (the earnings/price ratio or E/P) and the yields on...
...stock market returns fluctuate away from, and revert to, a running mean on a roughly annual basis.
...investors should avoid stocks with high short interest ratios.
...individual investors systematically show attention-driven herd-like behaviors.
...a high level of trading activity usually underperforms.
...just because there is a crowd of traders does not mean there is wisdom.
...Burton Malkiel continues to believe that the stock market is inexploitably efficient.
Could we make a bundle day trading? In their May 2004 paper entitled “Do Individual Day Traders Make Money? Evidence from Taiwan”, Brad Barber, Yi-Tsung Lee, Yu-Jane Liu and Terrance Odean assess the success of...
...consumer confidence is not a worthwhile indicator for stock market investors and traders.
...careful screening of value stocks using accounting fundamentals may be able to enhance returns significantly.
...the Fed Model is inferior to fundamental valuation in predicting long-term stock returns, but it may have some tactical value.
...mean reversions of fundamental ratios are key predictors of future stock market returns.
...investor and analyst herding and cascading help explain some observed stock market price phenomena.